A corporation is a legal entity created under state law, usually for the purpose of conducting business. The law treats a corporation as a person that can sue or be sued. A corporation is separate from its individual owners, or shareholders, who own stock in the company.
Corporate law encompasses all of the legal issues that corporations can face. Corporations are subject to numerous regulations they must follow in order to enoy the tax and other benefits corporations receive. Most states require corporations to conduct annual meetings with their shareholders, and many require more frequent meetings of the board of directors and the corporation's officers. Most corporations have an attorney present at all of these meetings to ensure that the corporation complies with all state and federal requirements.
In addition to these unique corporate law issues, corporations also face all of the legal issues that other businesses face. These issues can include employment law issues, contract disputes, product liability, intellectual property management, and others. Smaller corporations may be able to hire a single attorney with broad experience to handle all of the corporation's legal issues. Larger corporations, however, may need a team of lawyers with different specialties to handle daily contract, employment, and business issues.
Terms to Know
- Corporation – A legal entity formed to conduct business; can be either a close corporation, where only a few people own the corporation and its stock is not publicly traded, or a public corporation, whose stock is traded on the stock exchange
- S Corporation – A special type of corporation with a limited number of shareholders that enjoys certain tax benefits but without the stock options of a typical corporation
- Piercing the Corporate Veil – A judicial act of imposing personal liability on the owners, shareholders, or officers of a corporation for the corporation's wrongful acts
- Chief Executive Officer (CEO) – The executive with the chief decision-making authority to manage daily operations in a corporation; appointed by the corporation's board of directors
- Board of Directors (BOD) – A groups of individuals elected by the shareholders of a corporation to manage the corporation's affairs and appoint officers
Other Considerations When Hiring a Corporate Lawyer
Corporations do not have to be incorporated in their home state. Many businesses decide to incorporate in the State of Delaware, because Delaware provides many tax benefits and low incorporation costs that other states do not. Corporations incorporated out of state, however must still register their corporations in any state where they conduct business. If you are considering incorporating out of state, speak with an attorney to discuss the pros and cons.
State and federal laws regulate nearly every aspect of a corporation's internal administrative processes. Actions such as issuing stock, calling board meetings, appointing or firing officers, and communicating with shareholders are all governed by various state and federal statutes. Failure to follow these regulations could expose the corporation and even its owners and officers to liability and fines. Most corporations hire a lawyer experienced with these issues to ensure that the corporation is always in compliance with state and federal law.
If you or your business is facing a corporate law issue, contact a corporate lawyer immediately to explore your legal options.
Related Practice Areas